Current Rating and Its Implications
MarketsMOJO currently assigns RRIL Ltd a 'Sell' rating, indicating a cautious stance towards the stock. This rating suggests that investors should consider reducing exposure or avoiding new purchases at present, based on a comprehensive evaluation of the company's quality, valuation, financial trends, and technical indicators. The 'Sell' grade reflects a moderate level of concern about the stock's near-term prospects, though it is an improvement from the previous 'Strong Sell' rating held before 16 December 2025.
How the Stock Looks Today: Fundamentals and Performance
As of 28 December 2025, RRIL Ltd is classified as a microcap company operating in the Garments & Apparels sector. The stock's Mojo Score stands at 33.0, which corresponds to the 'Sell' grade. This score improved by six points from 27 to 33 on 16 December 2025, signalling a slight easing in negative sentiment but still reflecting underlying challenges.
The stock has experienced mixed returns recently. Over the past day, it declined by 2.18%, while the one-week return was a modest gain of 1.63%. The one-month and three-month returns were negative at -6.53% and -8.35% respectively. However, the six-month return shows some recovery with an 8.24% gain. Year-to-date, the stock is down by 5.89%, and over the last year, it has delivered a negative return of 6.67%. These figures indicate volatility and underperformance relative to broader market indices such as the BSE500, which RRIL Ltd has underperformed over the last three years, one year, and three months.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Quality Assessment
The quality grade for RRIL Ltd is below average, reflecting concerns about the company’s long-term fundamental strength. The latest data shows a negative compound annual growth rate (CAGR) of -11.56% in operating profits over the past five years. This decline suggests that the company has struggled to grow its core earnings consistently. Additionally, the average Return on Equity (ROE) stands at 8.84%, which is modest and indicates relatively low profitability generated from shareholders’ funds. The current ROE is 7.5%, reinforcing the view that the company’s operational efficiency and profitability remain subdued.
Valuation Considerations
RRIL Ltd is currently rated as very expensive in terms of valuation. The stock trades at a Price to Book (P/B) ratio of 2.1, which is a premium compared to its peers’ historical averages. This elevated valuation suggests that the market prices in expectations of future growth or other positive developments, despite the company’s recent fundamental challenges. Interestingly, while the stock has delivered a negative return of 6.67% over the past year, the company’s profits have risen by 45.2% during the same period. This divergence results in a Price/Earnings to Growth (PEG) ratio of 0.6, which may indicate undervaluation relative to earnings growth, but the high P/B ratio tempers this optimism.
Financial Trend and Outlook
The financial grade for RRIL Ltd is positive, reflecting some encouraging signs in recent performance metrics. Despite the weak long-term profit growth, the company has shown a notable increase in profits over the past year. This improvement could signal a potential turnaround or operational efficiencies beginning to take effect. However, the overall trend remains mixed given the stock’s underperformance relative to broader market indices and the volatility in returns over shorter time frames.
Technical Analysis
The technical grade is classified as sideways, indicating that the stock price has been trading within a range without a clear directional trend. This sideways movement suggests uncertainty among investors and a lack of strong momentum either upwards or downwards. The recent one-day decline of 2.18% and the negative returns over one and three months reinforce this view of a stock struggling to establish a definitive trend.
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What This Rating Means for Investors
For investors, the 'Sell' rating on RRIL Ltd signals caution. The combination of below-average quality, very expensive valuation, mixed financial trends, and sideways technicals suggests that the stock may face challenges in delivering strong returns in the near term. While the recent profit growth is a positive development, it has not yet translated into sustained share price appreciation or improved market sentiment.
Investors should carefully weigh the risks associated with the company’s weak long-term fundamentals and premium valuation against the potential for recovery. Those holding the stock might consider trimming their positions or monitoring closely for clearer signs of sustained improvement before increasing exposure. New investors may prefer to wait for more favourable conditions or a stronger technical breakout before committing capital.
In summary, the 'Sell' rating reflects a balanced view that acknowledges some positive financial trends but remains cautious due to valuation concerns and inconsistent performance. This rating aims to guide investors towards prudent decision-making based on the latest comprehensive analysis as of 28 December 2025.
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